As the Union Budget 2025 approaches, stakeholders across India's economic landscape are keenly anticipating measures that will bolster growth, enhance infrastructure, and provide relief to taxpayers. Finance Minister Nirmala Sitharaman is expected to present a budget that addresses these multifaceted aspirations, aiming to sustain India's economic momentum amidst global uncertainties.
A significant expectation centers on personal income tax reforms. Experts suggest that rationalizing tax slabs could substantially increase disposable income, thereby stimulating consumption. Proposed changes include raising the exemption limit to ₹10 lakh for middle-class taxpayers and introducing a 25% tax slab for incomes between ₹15 lakh and ₹20 lakh. These adjustments aim to provide relief to salaried individuals and improve household liquidity, potentially driving demand in sectors like real estate, fast-moving consumer goods (FMCG), and automobiles.
Additionally, there is a growing demand for rationalizing capital gains tax by reducing rates and increasing indexation benefits. Simplified tax structures could encourage retail investments in financial markets and foster long-term wealth creation.
Industry leaders are advocating for further simplification and rationalization of GST rates. For instance, the hospitality sector seeks a reduction in the GST rate from 18% to 12% for hotels with tariffs above ₹7,500 per night, which could boost domestic tourism. Similarly, the food and beverage industry is calling for the reinstatement of Input Tax Credit (ITC) under GST for restaurants and cloud kitchens to lower operational costs and improve profitability. Lowering GST on health insurance premiums from 18% to 5% or 12% is also proposed to make healthcare more affordable for middle-class families.
Infrastructure development remains a cornerstone of India's economic strategy. The government is likely to announce a significant increase in capital expenditure, estimated at ₹11 lakh crore, to drive economic growth through large-scale projects. Key areas of focus include:
Railways: A projected 15-20% increase in capital allocation for Indian Railways could enhance connectivity and logistics efficiency.
Roads and Highways: Continued investment in road networks and multi-modal logistics parks will strengthen India's transportation infrastructure.
Green Energy Transition: Enhanced funding for renewable energy projects like offshore wind farms and green hydrogen initiatives aligns with India's sustainability goals.
With every rupee spent on infrastructure generating a threefold impact on GDP, increased capital expenditure is expected to have a multiplier effect on economic growth.
To balance consumption trends, targeted measures are anticipated:
Job Creation: Initiatives through public welfare schemes and infrastructure projects.
Affordable Housing: Increased allocation under PM Awas Yojana to support affordable housing.
Support for MSMEs: Tax incentives and easier access to credit for Micro, Small, and Medium Enterprises.
Boosting household incomes rather than direct consumption incentives remains a priority, as this approach ensures sustainable demand growth over time.
The budget is expected to introduce sector-specific incentives to promote growth and innovation: